Micro-Mechanics proposes final, special dividend of S$0.08 as Q4 net profit jumps 22.7% 

SEMICONDUCTOR play Micro-Mechanics said in a bourse filing on Saturday (Aug 27) that it achieved its “highest-ever” quarterly results for the 3 months ended Jun 30 as net profit leapt 22.7 per cent to S$5.9 million, from S$4.8 million a year ago.

This came as revenue grew 14.8 per cent in the quarter to S$22 million, from S$19.1 million a year earlier, amid a 46.5 per cent jump to its US sales to S$5.6 million, and a 6.9 per cent jump to its sales in China, its largest market, to S$6.4 million.

Over the same period, its Singapore market registered double-digit sales growth of 33.5 per cent to S$2.6 million, the company, which manufactures high precision tools and parts used in process-critical applications for the semiconductor industry, added.

Earnings per share stood at 4.22 Singapore cents for the quarter, up from 3.44 Singapore cents a year ago.

With these, the company proposed a final dividend of 6 Singapore cents per share and special dividend of 2 Singapore cents per share, which will bring its total dividend payout for FY2022 to 14 Singapore cents per share. The dividend paid for FY2021 was also 14 Singapore cents.

FY2022’s dividends will be paid on Nov 18, if they are approved by shareholders at an annual general meeting which the company will hold on Oct 14, Micro-Mechanics said. The total payout will cost the company S$19.5 million.

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For the full year, the group’s return-on-equity improved to a record 34 per cent, it noted.

This comes as net profit increased 9.7 per cent to S$19.8 million on the back of revenue growth of 11.8 per cent to S$82.5 million, given the double-digit sales growth seen across its 3 largest geographical markets – China, US and Malaysia.

All in all, its sales in China grew 18 per cent to S$27.6 million in the year.

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Pointing out that the sales growth came despite the impact of the Chinese government’s movement control measures during the second half of the financial year, the company said that China remained its largest market, contributing 33.4 per cent to the group’s revenue. 

Its sales in the US, which accounted for 21.4 per cent of group sales in the fiscal year, ramped up 19.4 per cent to S$17.6 million, while its sales in Malaysia, which contributed 15.4 per cent in group sales, rose 10.9 per cent to S$12.7 million. 

Chief executive Chris Borch attributed this performance to the group’s operational resilience amid continued growth of the global semiconductor industry.

“Despite facing significant challenges in the aftermath of the Covid-19 pandemic that included staff shortages, inflationary pressures, supply chain shortages and other disruptions, we managed to keep our 5 worldwide factories running and focused on meeting the needs of customers,” he said.

While rapidly rising costs for materials, energy and manpower had weighed on the group’s gross profit margin, he noted that the year’s margin had stayed healthy, at 53.4 per cent, compared to 54.3 per cent for FY2021.

Nevertheless, Borch cautioned that inflationary pressures are expected to prevail, and said the focus now is on strengthening the margin through initiatives that enhance its value to customers, improve quality and streamline the operations of its factories.

The group is in a strong position to capitalise on the industry’s future growth, he added, as it expects to build more chip fabrication plants in China and the USA over the next few years. 

There are also efforts to turn Singapore and Malaysia into hubs for semiconductor equipment manufacturing, he pointed out.

Shares of Micro-Mechanics closed up 0.7 per cent or S$0.02 at S$3.10 on Friday.